There may be some good news for consumers this year as Congress will weigh a new Credit Card Bill of Rights that will help provide more protection from arbitrary decisions by credit card companies. The bill was introduced by Rep. Carloyn Maloney from New York, and primarily focuses on requiring credit card companies to treat the agreement with consumers more like a contract and to provide greater notice for any changes in rates, fees or billing cycles. It’s hard to see how this bill could be opposed from a consumer viewpoint, and as we’ve mentioned before it’s something long overdue.
“In recent years the playing field between credit card companies and credit cardholders has become very one-sided,” Maloney said. “A credit card agreement is supposed to be a contract, but what good is a contract when only one party has the power to make decisions?”
Many of the credit card companies have begun reforming certain practices, but the nickel and dime stuff continues unabated. I don’t think most banks and credit card companies really understand.
The banking industry says it is committed to consumer protection and responsible lending, yet it opposes many of the provisions in the bill. In a statement, Edward Yingling, president of the American Bankers Association, says he has “serious concerns” that certain aspects of this legislation “would have unintended consequences such as more expensive and less accessible credit.”
The Consumer Federation of America cites the key provisions of the “Credit Card Bill of Rights Act” would prohibit:
o Bait-and-switch interest rate and fee hikes for any or no reason at all during the life of the card;
o Assessing hidden and unfair interest rate charges by charging interest on balances already paid off;
o Unjustifiably maximizing interest charges by requiring consumers to pay off balances with lower
interest rates before those with higher rates;
o Charging late fees when consumers mail their payments seven days in advance of the due date; and
o Applying certain unfair interest rate hikes retroactively to balances incurred under the old rate.“We’re seeing a groundswell of consumer outrage about credit card practices,” says Jeannine Kenney, senior policy analyst at Consumers Union. “People are fed up.”
Well, that’s how reform takes place right? After enough people demand change, the legislators usually come around. Will this affect the bottom line for banks and financial institutions that issue credit cards? Maybe, but there will always be fees, charges and money to be made in business. Personally I’ll take a lesser dividend cut if the credit card agreements were easier to understand and little more consumer friendly. It should be pretty simple: Agree to a card, rate and billing cycle. And don’t change anything unless the consumer defaults on payments. And if something is going to change? Then let us know in plain english.
For specific details, you can review the .pdf press release from the Consumer Federation of America (3-page pdf).
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It’d be nice if this really works, but I’m betting the lobbyists kill it before it gets much steam.
I’m skeptical too, but it sure has a lot more visibility these days. Seems like an opportune time, especially with the recessionary fears and election year grand-standing, no one wants to “rain on the consumer parade” right now. Maybe this is the year? We’ll see- thanks for stopping by.